Indiana will get $1.6 million of the total, according to Attorney General Steve Carter.
Attorneys general from the 32 states had claimed that Lilly illegally promoted Zyprexa for uses not approved by federal regulators. Those included pediatric use, use at high dosage levels, and use to restrain elderly patients suffering from dementia, the states claimed.
The states also claimed Lilly failed to adequately disclose Zyprexa's side effects, such as weight gain.
Lilly admitted no wrongdoing in the settlement agreement. But the company did agree to promote Zyprexa according to specific guidelines, which it must adhere to for the next six years.
The settlement does not affect 11 other states, which had formally sued Lilly over its marketing and disclosures of Zyprexa. Nor does the deal affect the state of Alaska, which in March agreed to a $15 million settlement with Lilly.
Lilly also has faced thousands of lawsuits from patients, unions and insurance companies. It has agreed to pay $1.2 billion to settle 31,000 patient cases. It is still in litigation with health insurers and unions, who are seeking as much as $7.7 billion in damages.
Lilly shares rose $1.20 this morning to trade at $39.62.